December Consumer ABS Market Update

Monthly Commentary

Primary

Close to $9B in ABS priced in December, bringing total volume in 2017 to $239B.
Autos and credit cards led the way with $111B and $56B, respectively. Student
loan issuance was third with $16B. There was also notable issuance volume in
unsecured consumer loans, $13B, and whole business franchise, $7B

Lending Club launched a $252mm deal with the 0.5yr A rated tranche pricing
at 85/e and the 2yr BB subordinate pricing at 290/n

Wendy’s, the hamburger restaurant chain, issued a $1.075B deal. The 7yr
priced at 135/n and the 10yr at 158/n, yielding 3.6% and 3.9%, respectively.
The deal is backed by royalty income from the restaurants

Secondary

Volume in secondary trading slowed down, which is not atypical for this time of
the year. A total of $4.5B traded with spreads roughly flat to a touch weaker. Short
cards and prime autos trade in the single digit spreads, while short FFELP trade between 15-25dm

Market News

The Department of Education announced a policy reversal
on how it will grant relief to student borrowers who
were defrauded by Corinthian Colleges. Previously, the
department provided 100% student debt relief, but now
it will provide relief based on earnings. Borrowers who
earn less than 50% of their peers in the same vocation will
still receive 100% forgiveness. Those who earn more than
50% will receive between 10-50% forgiveness

Lawmakers have proposed making changes in the
Higher Education Act – the law that governs many
education policies. A few of the proposed changes in
the bill titled Promoting Real Opportunity, Success and
Prosperity Through Education Reform (PROSPER),
include reducing the number of repayment plans
from eight to two, eliminating loan forgiveness from
the income-based repayment and the public sector
programs, putting limits on borrowing amounts for
graduate students and parents of undergraduates